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Female CEOs Outperform, But Glass Ceiling Remains

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Despite various initiatives to get more women into the executive pipeline, the number of US corporations with a female CEO remains stuck in the low double digits.

February 12, 2016

According to a year-end 2015 study from research analysts S&P Capital IQ, only 21 S&P 500 companies had a woman at the helm as of late November. That paltry number was down from 25 in 2014. Overall, the percentage of female CEOs in the S&P 500 has risen by just a single point since 2006—from 3% to 4%.

One response from board members who hire CEOs at publicly traded companies is that they are paid to safeguard shareholder value, not to advance a social agenda. As it turns out, though, one of the best ways to boost your stock price is—you guessed it—to put a female in the corner office.

During 2015, analyses by Bespoke Investment Group and hedge fund Quantopian, among others, showed shares of woman-led corporations outperformed those of companies with male CEOs. For the full year, women CEOs returned 0.19% to their shareholders, on average, while the S&P 500 Index declined by around 1%. The materials sector, which has zero female CEOs, lost 9.6%. Meanwhile, information technology companies, five of which are headed by women, handed their shareholders a tidy 4.7% gain.

Statistics like these have been piling up for years, says Rachel Soares, director of research at Catalyst, a New York–based advocacy nonprofit. But it’s not only a company’s stock performance that improves when women advance into leadership positions. “Inclusion and diversity are correlated with more innovation, better financial results and higher group performance,” says Soares.

So why is the number of women CEOs going in the wrong direction? Pavle Sabic, director for credit market development and author of the S&P Capital IQ study, points out that the composition of the S&P 500 changes, so a smaller number of female bosses may simply mean some women-led companies dropped out of the index. Still, says Soares, over the long term “we want the trend to go the other way.”